Still-Hot UK Inflation Raises Risks of Hawkish BOE Surprise

Hawkish RisksThe big focus in FX markets today will be the June Bank of England meeting. The BOE had been tipped to hike rates by a further .25%, marking the 13th consecutive rate hike and the fastest increase in monetary tightening in thirty years. However, on the back of a set of hot inflation data yesterday, traders are now eyeing hawkish risks into the meeting with some calling for a larger .5% move from the BOE.BOE Under PressureThe bank has faced plenty of criticism over its handling of inflation with many arguing that the bank was too slow and too gentle with its tightening regime. However, with mortgage rates now at their highest levels in years (around 6%), the BOE is facing political pressure from some senior Tories over the prospect of further tightening.Near-Term RisksWith inflation still not dropping, the BOE looks set to press ahead with further tightening this year. However, the growth outlook will now certainly be called back into question which might feed into a lower GBP rate despite the bank hiking. Near-term, a larger rate increase should drive GBP higher today while the expected .25% hike might see GBP come under some pressure.Technical ViewsGBPUSDThe breakout above 1.2659 has stalled for now. However, while this area holds as support and with momentum studies bullish, the focus is on a further push higher towards the 1.2992 level next. Should the pair drop back inside the bull channel, however, focus will turn to support at 1.2437 next.